Me in October: In August I reported that economic disasters seem thin-tailed, and so are not existential risks. Even so, [a new study suggests] we should still devote more attention to them. What makes the global economy vulnerable to economic collapse, and what can we do about it? Anders Sandberg explores
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Just noticed a correspondance to Nature (http://www.nature.com/natur..., Could a boom in technologies trap Feynman's simulator? by Dietrich Leibfried) that suggests another reason to get substitutability: the need for certain robust technologies even without the disaster. In the letter Leibfried notes that we may need several different technological implementations of quantum physics simulators to make sure they are giving accurate results. In the case of internet standards, there has been the tradition of demanding at least two different implementations of the same proposed standard, so that there is good reason to think it works.
I'm not certain this technological demand is general enough to affect all of society, but maybe one could tweak standardization body rules and public call for bids to favour technologies with multiple implementations.
I would love it if Robin elaborates his explanation for replying to multiple people in one comment. Even if this is a pure-status-grab, I have a hard time complaining about someone making such moves on the fantastic free blog they write.
But most trades are settled before the event occurs. I routinely trade on Betfair and the profit/loss is credited to my account right away - I don't have to wait for the event to occur.
why can’t simple trades work even for long-term bets on an existential disaster?
Because prediction markets need to be adjudicated after the event occurs, otherwise they don't work. Unless the contracts happen to be denominated in paperclips, it's quite difficult to settle them after an unfriendly AI has taken over the world.
You can start making money off prediction markets immediately, no matter how far into the future an event is, or what its consequences are. The probabilities shift up and down as more people put money on, and you simply 'Back' (bet for the event) at a high price, and 'Lay' (bet against the event) at a lower price. Simple trading, why can't simple trades work even for long-term bets on an existential disaster?
Initial Market on Unfriendly AI eating the world by 2020:
For $1 investment Day 1 Market - Best Prices
Back: $100 Lay: $112
Ignorant punters have placed bets after Day 1 , I see that they've underestimated the odds and I 'Back' for big money.
Day 2 Market - Best Prices
Back: $20 Lay: $23
A lot more money has gone on, some experts on AI have placed their bets, and the odds are now more reasonable. I lay.
Result: Backed at $100, Layed at $23. Profit after only a day.
komponisto, Robin had previously expressed an interest in finding low cost ways to avoid high-status moves. See this post.
Human conversation adaptations do well at not only helping us infer what others know, but also what they know that others know, what they know others know that still others know, and so on up the meta-knowledge hierarchy.
Yes, the human brain is good at keeping track of the threads of a conversation. But it's not infinitely good. Explicit threading is a technological assist that helps the brain keep track of threads even better.
Analogously, human brains are good at keeping track of their associates, their family, friends, and acquaintances. But we still benefit from having address books.
Perhaps one factor is the concern that bets in favor of collapse can’t win because there will be no infrastructure available to pay off if collapse happens.
This is almost certainly a factor. Robin has proposed bets involving refuge tickets to deal with the most severe cases, and some milder scenarios may be evaluated by proxies such as the price of gold and oil.
Should we create a resilient infrastructure to make sure that bets about crisis scenarios are adjudicated? What would such an infrastructure look like?
Agree with Wei on it being a high-status move. Of course, RH should be entitled to assert high status here: it's his own blog!
Some people claim that a source of fragility is our systematic and institutional underestimation of the likelihood of serious collapse. The "black swan" critique by Nassim Nicholas Taleb runs along these lines. Perhaps one factor is the concern that bets in favor of collapse can't win because there will be no infrastructure available to pay off if collapse happens. This could cause market prices, and decisions based on them, to systematically underestimate collapse risks.
I wonder if we could do something with a small kernel of a market or similar forum which is considered very likely to survive collapse. Perhaps contracts could be denominated in gold, and the system be administrated by the Church. Would there be some way to leverage such a high-reliability subsystem and build more reliability into the larger economy?
"I provide the nesting out of courtesy to those who comment, but"
Arguably a consistent style is more important than threaded versus flat comments. Do you have the option of turning threading off on future posts?
Yes inefficiently diverging standards also causes needless fragility; I'll ad that to the list in the post.
One non-intuitive thing I noticed in my simulation of substitutes was that it didn't matter noticeably if the possible substitutes for a good were randomly selected or had a power-law distribution (i.e. there are some goods that can substitute for a lot of things, while others are specific). Of course, this might be an artefact from not simulating whether demands could be met - generic products might suffer much stronger rise in demand than non-generic products in a crisis, and this could cause them to run out.
Demanding open standards such as phone charging through USB or interoperability of document formats might be a way of forcing substitutability. I guess there is a sizeable economics literature on what conditions make industries want such standards? It might be worth looking at whether this could be generalized to other fields too - having more engines that can run on different kinds of fuel seems worthwhile.
as a slight aside to the point of the article, but referencing to the actually example you gave, you might be interested to the know that the EU has mandated that all mobile phones must be rechargable via a USB connection.
This is popular amongst users, especially with a family: 5 phones, one charger. Hurray. I would be interested to know whether manufacturers fought it or welcomed it.
Rob, raising the crisis-price of goods that can be stockpiled should induce private stockpiles of such goods. When a crisis-price can differ from an ordinary price, consumers would naturally raise the crisis-price of goods they really need in a crisis.
Katja, anything that is adapted in great detail to use in a particular environment may work less well in differing environments. Human conversation adaptations do well at not only helping us infer what others know, but also what they know that others know, what they know others know that still others know, and so on up the meta-knowledge hierarchy. Most nested comment systems do badly at supporting meta-knowledge.